(Adds detail, background)
By Chijioke Ohuocha
LAGOS, March 21 The Nigerian central bank has
weakened the naira by 0.6 percent in the last two weeks through
dollar interventions on the official market aimed at narrowing
the spread with the black market, traders said on Tuesday.
The naira was trading at 307.50 on the interbank market on
Tuesday, almost 30 percent weaker than on the unapproved retail
market where it was quoted at 435 per dollar.
The central bank had been selling dollars at 305 levels
since August to support the Nigerian currency. However it
devalued the naira last month for individuals, paving the way
for a possible broader move to narrow black market
"The central bank is depreciating the currency. It's a
deliberate effort to narrow the gap with the black market," one
trader at a major local bank told Reuters.
The central bank, which declined to comment, is due to
announce its decision on interest rates at 1330 GMT with markets
watching for signs of a more relaxed foreign exchange rate
regime after the government this month called for
A Reuters poll expects the bank to leave its benchmark
interest rate unchanged at 14 percent to tackle high
The West African country has tried to make the exchange rate
more flexible before, leading to a 30 percent devaluation last
year, only to reimpose a quasi currency peg, creating multiple
Two weeks ago Nigeria unveiled an economic recovery plan,
including measures to relax foreign exchange restrictions, in a
drive to pull Africa's largest economy out of its first
recession in 25 years.
It said the central bank will aim to achieve a
market-determined exchange rate regime, but did not specify
whether this would mean allowing the naira to float freely or
keeping the current system of dollar injections to address
The bank's governor later said he was not convinced about a
currency float due to its effect on inflation, which fell for
the first time in 15 months in February.
Instead the bank has sold millions of dollars via currency
forwards on the official market in recent weeks to try to clear
a backlog of demand and narrow black market rates which traded
as weak as 520 last month.
(Editing by Alexander Smith)